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Vietnamese big guy missed footing and fell in Myanmar

Posted by: vivian on July 15, 2013in TechnologyComments Off on Vietnamese big guy missed footing and fell in Myanmar

VietNamNet Bridge – The winning bidders offered very high prices, therefore, even if Viettel had offered higher by $100 or $200 million, it would not have obtained the contract.

The military telecom group Viettel, one of the biggest ones in the field in Vietnam must not be happy when TOTSC, a Myanmar council, called the names of the other two telcos in getting the investment licenses in the country. The two were Norway’s Telenor and Qatar’s Ooredoo.

As such, Viettel tasted the bitterness as soon as it made the first attempt to set foot on the Myanmar market, a market with great potentials. The South East Asian country has 60 million in population, but only 9 percent of the population use telecom services.

According to TOTSC, the two licenses granted to Telenor and Ooredoo have the validity for 15 years with the right to develop telecom services throughout the country. They have to be sure that mobile services would be provided at 75 percent of the provinces and cities within five years since the day they began making investments, while the data transfer services would be available in half of the country’s area.

Fredrik Baksaas, President and CEO of Telenor, said Telenor would develop a most modern mobile network in Myanmar. The group now has 150 million mobile subscribers in 11 countries in the Central and Eastern Europe, Asia and 18 other markets with 33 percent of ownership ratio in Russian VimpelCom.

In 2012, Telenor reported the total turnover of $16.5 billion and the net profit of $1.4 billion. The group has committed to develop the mobile network in the market the next year with the nationwide coverage within five years.

Right after TOTSC named the two winning bidders, the international media noted that TOTSC has chosen an investor with powerful financial capability – Ooredoo – and an investor good at technology – Telenor.

Jeremy Sell, Ooredoo’s Global Strategic Director, has stated that the group would pour $15 billion within 15 years in Myanmar, which includes the initial capital, operation costs, expenses for licensing and tax payment.

Vietnamese experts believe that Viettel failed in the race in the Myanmar telecom market not because of the technical issues. Technologically, they said, Viettel is in no way inferior to the other big guys in the world.

As such, the answer could be related to the financial capability. Both Telenor and Ooredoo have not declared the values of the bidding packages. However, according to Reuters, the value could be over $3 billion.

Tong Viet Trung, Deputy General Director of Viettel, said Viettel did everything it could in the affair, from preparing documents to offering attractive commitments to the Myanmar government. However, the winning bidders offered very high prices, therefore, even if Viettel had offered higher by $100 or $200 million, it would not have obtained the contract.

However, Trung said Viettel would not give up the game, because it can cooperate with Telenor and Ooredoo to develop the investment projects in the telecom sector in Myanmar.

Viettel has asked the Prime Minister to promulgate the decree on making portfolio investments overseas to pave the way for Vietnamese companies to penetrate foreign markets.

“In many markets, foreign investors have bought all the operation licenses in the telecom sector. If Vietnamese enterprises want to exploit the markets, they would have to buy stakes from the investors,” said Hoang Anh Xuan, Viettel’s CEO.